Kathmandu, Jan 1-With the beginning of new year, countries associated with South Asian Association for Regional Cooperation (SAARC) have entered into the regional trading regime South Asian Free Trade Area (SAFTA) with the aim of boosting intra-regional trade.
The 13th SAARC summit held in the Bangladeshi capital Dhaka had agreed to implement the SAFTA agreement from 1 January 2006 and the 12th meeting of the SAARC Committee of Experts had finalized the modalities for the enforcement of the agreement.
As per the SAFTA agreement, developing countries will bring down their customs tariff to 20 percent while Least Developed Countries (LDCs) countries will bring it down to 30 percent during the first phase between 2006-2008. Non-LDC nations will bring down tariff level to between 0 and 5 percent by 2009 while LDC nations will do so by 2016.
Though the agreement came into force from today, Nepal has to reduce its custom tariffs from August 2006 as the Nepalese new economic year begins from August.
Experts opine that implementation of the agreement will create more investment opportunities in the region, but Nepal has to identify the products of comparative advantage and special areas to penetrate the regional market, as Nepalese products are not competitive in SAARC region as well.